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The new Mega: a privacy triumph or just more content theft?

Kim Dotcom, the flamboyant file-sharing champion who was arrested a year ago on copyright charges, is back with a new service called Mega that offers an easy way to store content in the cloud. Hailing itself as “the privacy company”,Â the new site provides users with encryption tools that make it hard for governments — or Mega itself — to detect just what type of information a person is storing.

Some media outlets are celebrating Mega as a phoenix-from-the-ashes story and aÂ triumph for technology and privacy. The content industry, however, points to the track record of Kim Dotcom to warn that his new “privacy company” is just another ruse for people who want to share content without paying for it.

Here’s a look at what the service is all about — and the legal case for and against what Mega is doing.

Mega: A super secure locker for your files (or Hollywood movies)

Mega is a successor to Kim Dotcom’s earlier venture, Megaupload, which millions of people used to upload and store their files before the site was taken down last year in a controversial raid backed by the US government.

The difference this time around is encryption. Every file that a Mega users uploads and places in the online locker is encrypted so that third parties, including Mega itself, are unable to tell if that video you are storing is your niece’s birthday or Zero Dark Thirty. Sites like Ars Technica and Torrent Freak provide a good overview of theÂ cryptography involved but the gist of it is that Mega uses a combination of passwords and browser-based encryption to keep your files private.

While Mega is nominally a way to store your files, it can also serve as an easy way to distribute them too. A Mega user, for instance, can share a file’s URL along with the password or else simply create a URL with the password embedded within it.

An advocate or an opportunist?

In an age where governments and tech companies vacuum up vast amounts of personal data, there is an appeal to the sort of encryption that Mega offers. The company, aware of this desire for anonymity, is using its encryption as a marketing tool. On its website, the company invokes a privacy section from the Universal Declaration of Human Rights and promises to give users control over who sees their files.

While this all sounds grand in theory, it’s not clear how effective it will be in practice. As Torrent Freak notes, the privacy scheme is far from exhaustive and lets Mega keep “quite detailed records of its users, including IP addresses”.

Meanwhile, a closer look at Mega’s privacy policy also reveals several references to advertising. These include Mega’s right to collect information about your visits to the site so as to serve you ads; it also mentions Mega’s intention to sell information about its users’ (albeit anonymous) activities to advertisers.

These less-than-perfect terms suggest that Mega’s prime interest is profit not privacy. Just as ad sales and premium memberships from Megaupload allowed Kim Dotcom to blow a bundle on models and yachts, it appears “the privacy company” is likewise designed more as a money machine than a moral cause.

Mega’s See No Evil Strategy

The new Mega site is barely a day old but the content industry is already menacing it. TheÂ Motion Picture Association of America, for instance, said it is reserving judgment but cited Kim Dotcom’s history of “pushingÂ stolen, illegitimate content into the marketplace” to say it is skeptical. Meanwhile, TorrentFreak reports that a group representing the adult entertainment industry plans toÂ lobby Visa and others to cut off anyone that provides payments services on behalf of Mega.

These reactions are hardly surprising and, given the content industry’s history of legal overreach, one has to take their claims with a grain of salt. But given that the new Mega service is likely to be a bonanza for pirated content, it’s worth asking if the company’s strategy to avoid legal liability will hold up.

This time around, Kim Dotcom and his merry Mega men want to ward off copyright claims by pointing to the site’s encryption features to say they have no idea whether users are sharing copyrighted files or not. The site also boasts strong language that piracy is “strictly prohibited”.

Unfortunately for Mega, the site’s copyright strategy also sounds a lot like “willful blindness” — a legal concept that means you can’t avoid liability by deliberately staying unaware of what’s going on. US courts have recently taken dim views of willful blindness in both patent and copyright cases. Mega, however, has set up shop in New Zealand and the small country has so far succumbed to Kim Dotcom’s theatrics, which means the company is likely to remain open for business for the foreseeable future.

The bottom line is that Mega’s arrival puts internet users in a bind. On one hand, they can side with a company that is doing good things for privacy but that is also greedy, self-serving and manipulative. On the other, they can side with content owners who have legitimate complaints about Mega, but who have burned much of their credibility in past copyright debates.